Editorial: Massachusetts needs to bring rationality to tax policies

After years of handing out tax breaks with one hand and closing loopholes (real and imagined) with the other, the Legislature’s Tax Expenditure Commission is taking a sober look at its hodgepodge of tax policies.

Call us cynics, but we are fairly sure the final result of this process will not end with a recommendation for an overall lower tax yield from individuals and businesses. Rest assured, the commonwealth of Massachusetts will come out ahead.

Another obvious beneficiary: Putting some 200 tax breaks on trial amounts to a complete windfall for the lobbying industry. There won’t be a special interest in Massachusetts without beefed-up representation on Beacon Hill.

All the same, some tax break scrutiny is overdue. The concepts behind some of the breaks need a serious stress test, like the sales tax exemption on candy and soda. (We agree with the governor’s recommendation to place, what is in effect, a user’s tax on those items.) New economic incentives, such as the film tax credit, have been dramatically unsuccessful yet persist because of pipe dreams of growing a stand-alone film industry. Even when the Department of Revenue releases figures that show that the commonwealth is shelling out some $140,000 per job created by the tax credit, Beacon Hill keeps saying the show must go on.

Because some tax breaks, like the film tax, defy logic, it’s important that legislators create measurable economic goals for the incentives they hand out. If those goals aren’t met within a reasonable time frame, the break should be automatically rescinded. Too many of these tax breaks are supported by voodoo economics. Industry-specific tax credits often are about creating jobs, but usually there are no concrete job numbers to match against the expenditure.

Also, companies that partake in the breaks should agree to a certain degree of transparency. For example, film companies must provide line-by-line detail of the expenditures they are writing off at taxpayers’ expense so the public can really get a feel for what it really means to be paying for 25 percent of Tom Cruise’s salary.

Massachusetts taxpayers deserve a much better accounting of what they get for their money. The Tax Expenditure Commission’s efforts are a welcome development in bringing some rationality to an irrational and under-scrutinized process.